Consumers Claim ARS Sends Misleading Collection Letters

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ARS National Services Inc. is facing allegations that its collection letters violated the Fair Debt Collection Practices Act (FDCPA). In a lawsuit filed against ARS, the plaintiffs claim the debt collector sent letters that contained the following statement: “Department Stores National Bank will report any discharge of indebtedness as required by the Internal Revenue Code and corresponding IRS regulation.” The suit argues that this statement is misleading to the least sophisticated consumer because debt collectors are only required to report debt forgiveness if the principal amount forgiven exceeds $600. According to the complaint, “[a]ny tax advice that does not specify the tax consequences as it applies to the consumer's circumstances is nothing more than a ploy to elicit a more substantial payment from the consumer than the consumer would have paid, had he or she understood the tax reporting consequences.” The suit argues that because the defendant’s letters are “vague, incomplete and misleading,” they violate the FDCPA.